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Oil prices have slipped by 1% as Democratic candidate Joe Biden is inching closer to victory in the close US presidential race.

However, it appears that Republicans will retain control of the US Senate, which could decrease the chances of major Covid-19 relief aid.

Brent crude futures were down by $0.64 to $40.59 a barrel, while US West Texas Intermediate (WTI) futures fell by $0.60 to $38.55, Reuters reported.

Joe Biden predicted victory over President Donald Trump after winning two ‘critical US states’, while Trump alleged fraud, filed lawsuits and called for recounts in a race that is still to be finalised.

RBC Capital Markets wrote in a note: “The next few weeks could be quite tumultuous with looming court challenges and recounts.”

The current trend of vote-counting suggests that Republicans are likely to retain Senate control, while Democrats will hold onto a slim majority.

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By GlobalData

If Joe Biden wins the US presidential election, a divided Congress may prevent him from enacting major priorities such as fighting climate change, providing aid to millions whose lives have been impacted by the pandemic, or easing sanctions on the oil-producing nation Iran.

Axi chief market strategist Stephen Innes stated: “Fortunately for oil markets, it would seem any olive branch to Iran will not be extended anytime soon.”

If Biden wins, RBC analysts expect that Iran would return about one million barrels per day of exports to the market by the second half of next year.

Meanwhile, Commonwealth Bank commodities analyst Vivek Dhar stated: “The volatility in oil will remain because of its sensitivity to the US dollar. And the US dollar will remain volatile for at least the next few days as the US election still has to be worked out.”